Correlation Between Basso Industry and Hiwin Technologies
Can any of the company-specific risk be diversified away by investing in both Basso Industry and Hiwin Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Basso Industry and Hiwin Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basso Industry Corp and Hiwin Technologies Corp, you can compare the effects of market volatilities on Basso Industry and Hiwin Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Basso Industry with a short position of Hiwin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basso Industry and Hiwin Technologies.
Diversification Opportunities for Basso Industry and Hiwin Technologies
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Basso and Hiwin is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Basso Industry Corp and Hiwin Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Technologies Corp and Basso Industry is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Basso Industry Corp are associated (or correlated) with Hiwin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Technologies Corp has no effect on the direction of Basso Industry i.e., Basso Industry and Hiwin Technologies go up and down completely randomly.
Pair Corralation between Basso Industry and Hiwin Technologies
Assuming the 90 days trading horizon Basso Industry is expected to generate 12.51 times less return on investment than Hiwin Technologies. But when comparing it to its historical volatility, Basso Industry Corp is 1.99 times less risky than Hiwin Technologies. It trades about 0.0 of its potential returns per unit of risk. Hiwin Technologies Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 24,150 in Hiwin Technologies Corp on November 2, 2024 and sell it today you would earn a total of 5,150 from holding Hiwin Technologies Corp or generate 21.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Basso Industry Corp vs. Hiwin Technologies Corp
Performance |
| Timeline |
| Basso Industry Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hiwin Technologies Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Basso Industry and Hiwin Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Basso Industry and Hiwin Technologies
The main advantage of trading using opposite Basso Industry and Hiwin Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basso Industry position performs unexpectedly, Hiwin Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hiwin Technologies will offset losses from the drop in Hiwin Technologies' long position.The idea behind Basso Industry Corp and Hiwin Technologies Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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